Murkowski proposes $63 million supplemental budget

JUNEAU (AP) -- Gov. Frank Murkowski is proposing a $63.3 million supplemental spending plan to make up for shortfalls and unanticipated expenses that arose in the last fiscal year.

The spending plan includes $31 million in costs associated with natural disasters that struck the state last year -- including $19 million in fire suppression, according to the governor's office.

Murkowski said state department heads were able to find savings or avoid the need for additional funds in order to keep the supplemental spending plan low. The Legislature's budget analysts had anticipated a $140 million supplemental, the governor's office said.

''What we've got here is just what is absolutely necessary,'' Murkowski said. ''It's kind of a low-cal, low-fat supplemental, but we think it's a responsible part of the mission to control spending.''

The request includes $7 million for programs short-funded last legislative session, $15 million due to increased caseloads and $11 million in other items such as increased fuel costs and litigation payments.

Disaster funds include $5 million in state funds for the November earthquake, $4.8 million for floods in the Interior and Kenai Peninsula, and about $851,000 for an October sea storm that struck the Kotzebue area.

But the request does not include more than $55 million to cover federal Medicaid funds lost under the state's ''Fair share'' program.

Lawmakers had anticipated $55.6 million in federal funds would be funneled through the Alaska Native Medical Center under the program.

The program allowed the state to pay some Medicaid providers at a higher rate and keep most of the increase to be used to generate more federal matching funds.

But the U.S. Department of Health and Human Services rejected the state's plan in July, after the Legislature had approved a budget that expected the funds.

Under the program, the state could have attracted about $130 million in federal funds by recycling earlier federal receipts in this manner, said Bob Labbe, deputy commissioner for the state Department of Health and Social Services.

The state filed an administrative appeal of the agency's ruling in September and expects a hearing as early as next month, Labbe said. The case could ultimately end up in the 9th U.S. Circuit Court of Appeals.

''We believe we still have a very strong legal case,'' Labbe said.

Labbe said the federal ruling did not result in any cuts in services but that the program could provide up to two months in funding for the state's skyrocketing Medicaid budget.

The administration will ask for a $9.3 million ''fast track'' supplemental spending plan for items that must be addressed before the Legislature considers a regular spending plan in mid-May. The state's ''regular'' supplemental request is $54 million.

Murkowski said the reduced supplemental spending requests demonstrate his administration's commitment to controlling growth in state spending.

But Democrats were quick to note the spending plan would have been the highest in 10 years had Murkowski not shelved the Medicaid portion in dispute. If lost Medicaid funds had been added, Murkowski's supplemental plan would have cost nearly $120 million, Democrats said.

''When the governor said he pared it down to a lean and mean no-fat supplemental, that's not entirely accurate,'' said Rep. Eric Croft, D-Anchorage. ''What he really did was take the $120 million and let half of it ride on the roulette wheel.''

Last year the Legislature approved nearly $103 million in budget overruns as a result of unexpected costs and shortfalls.